Different Types Of Franchises

Fundamentally there are two types of franchises

. They are Product distribution franchises and Business format franchises. The most significant portion of the product distribution format is that the product itself is manufactured by the franchisor. Many times some sort of pre-sell preparation is necessary on the franchisee end before their sale.

One more important difference between these two types is that in product distribution type of franchises, the franchisor licenses their logo and trademark to the franchisees however he/she does not provide the complete system necessary to run the business successfully. However in the business format type the total system is supplied by the franchisor for running the business. Nowadays most of the franchises are of the type business format franchises. If you look at United States, almost 80% of the totals of 770,000 franchise businesses are of the business format franchise type. Lets have a close look at these two types of franchises.

Product Distribution Franchises: In this type of franchises, the franchisees sell manufactured products to the franchisor. This type of business can often be found in industries such as automobile, drinks and automobile accessories. These franchises are similar to the supplier-dealer kind of relationships. However in the product distribution franchises, franchisee has the benefit of getting more services from franchisor than compared to what dealers will get from their suppliers.

Business format franchises: In this type of franchises, the franchisee makes use of franchisor's brand name and also his trademark. And more significantly, the franchisee gets to use the complete business system of the franchisor. This type of format is helpful in achieving consistency that gives results in form of sustained success. In this type of structure the franchisee is empowered with a detail plan that details almost all things related to operation of the franchise. In this type the franchise is provided training about things such as advertising and marketing of the franchise, management of the premises, recruitment and training of staff, greeting new and old customers and all other things related to the operation of the franchise.

Remember, both the types have their pros and cons to consider. It is only hard work and healthy interest in your business that can guarantee success of the business. The use of franchise method has risen significantly in recent times. You may also use franchise management software in order to make your experience successful. This software simplifies the nature of running a franchisor model of business. Good franchise software provides features such as corporate communications, new store management, data collection, administration and marketing management. This makes your life a lot easier.

by: Jamie Francis

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